Back up withholding tax is reported as which type of tax?

Study for the AIPB Mastering Payroll Exam. Review flashcards and questions with explanations. Prepare effectively and boost your confidence!

Backup withholding tax is reported using Form 945. This form is specifically designed for reporting withholding tax that applies to certain payments where the IRS requires backup withholding due to the taxpayer not providing a correct taxpayer identification number (TIN) or due to other conditions that necessitate withholding.

This tax is distinct from other payroll-related taxes; for instance, Form 940 is used for reporting Federal Unemployment Tax (FUTA), Form 941 is for quarterly reporting of income taxes withheld, and Form 944 is intended for smaller employers to report their annual payroll tax liability instead of quarterly. Each of these forms serves a different purpose regarding payroll tax reporting, making Form 945 the correct choice for backup withholding tax.

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